Majority think now's the time to buy a house

The proportion of people thinking it is a good time to buy a house continues to rise, even as most people taking part in a new survey expect house prices to fall further.

The ASB housing confidence survey for the three months ended January found 53 per cent of respondents think now is a good time to buy, up from 45 per cent the previous quarter.

But 15 per cent consider now a bad time to buy, down from 21 per cent.

At the same time 60 per cent expect house prices to go lower, compared with 55 per cent previously, the survey shows.

The 9 per cent expecting higher prices in the latest survey, compared with 11 per cent, leaves a net 51 per cent of respondents expecting house prices to fall in the next year.

That is up from a net 44 per cent in the previous quarter and moving back towards July's low of a net 55 per cent.

"Recent results remain overwhelmingly the weakest in the survey's history," ASB chief economist Nick Tuffley said.

Declining interest rate expectations continued to have a significant influence on attitudes towards the housing market, with lower prices also helping.

But the lower mortgage rates and improvement in sentiment towards housing had not had much apparent effect on the housing market.

Reasons for the lack of recovery included little urgency among buyers given they expected further price falls, while higher deposit criteria would be another factor, Mr Tuffley said.

"But increasingly an air of uncertainty about the direction of the economy is taking hold on decision-making by all and sundry at present."

The lower interest rates may have put a floor under turnover and could help some recovery in housing turnover during the year.

Despite that, he continued to expect house prices to fall for much of this year, though at a slightly more gradual pace than last year.

Several structural issues argued against a strong rebound in house prices, Mr Tuffley said.

House prices were still high relative to incomes and rental yields were still low in an absolute sense, even if they were starting to look attractive relative to interest rates.

- NZPA